A look into the politics of inequality – Listen to Zanny Minton Beddoes

8 May

By Keffyalew Gebremedhin –
The Ethiopia Observatory

    “Not all inequalities are unjust, but the levels of inequality across much of Africa are unjustified and profoundly unfair. Extreme disparities in income are slowing the pace of poverty reduction and hampering the development of broad-based economic growth. Disparities in basic life-chances – for health, education and participation in society – are preventing millions of Africans from realising their potential, holding back social and economic progress in the process. Growing inequality and the twin problems of marginalisation and disenfranchisement are threatening the continent’s prospects and undermining the very foundations of its recent success.”

    –

    Kofi Annan, Chair of the Africa Progress Panel, former Secretary-General of the United Nations and Nobel Laureate

From the late prime minister down to some of his living ardent disciples, we have heard from time to time about their efforts to persuade Ethiopians (possibly the world too) that disparity in wealth in Ethiopia, if not non-existent, is relatively low. Of course everything is always relative, but this sounds some kind of cruel joke of soulless mistreading of the statistics. There is nothing more absurd than claiming this for a country with 71.1 percent of its population reported to be under “severe poverty” – second only after Niger – according to the 2013 UNDP’s Human Development Index.

In the light of this and similar other realities in Africa, and against the backdrop of Ethiopia being seen for the past decade as a star performer in economic growth, the growing concerns of many experts and international personalities has increasingly become the likelihoods of instability on account of the rising level of inequalities in countries.

For instance, while the 2012 Africa Progress Report (APR) with a title “Jobs, Justice and Equity – Seizing Opportunities in Times of Global Change” – acknowledges a decade of buoyant growth in Africa, it singular in its emphasis, “The current pattern of trickle-down growth is leaving too many people in poverty, too many children hungry and too many young people without jobs.”

In explaining this, the report notes that Africa governments are “failing to convert the rising tide of wealth into opportunities for the most marginalized citizens.” The worst that has been witnessed in these growth periods is the tragedy of some governments making the conditions of the poor worse by their bad policies.

Such instances include policies that give rise to inflation, because of which the poor find themselves poorer or economic growth is damaged, affecting more and more people. The rich always have fallback in wealth, while the poor are the ones that suffer deprivations the most.

As evidence, theAPR report indicates that in 1996 there were only 13 countries with inflation rates above 20 percent. Since the mid 2000s, there have been no more than two because of improved policies. As a matter of fact, one of the two culprits that could not reign its high inflation rate this day has been Ethiopia. That is why this webpage has repeatedly contested that, in the face of the persistent double-digit inflation the poverty reduction Ethiopian has been claiming is no less the work of miracle.

There are also governments that have been accused of arrogantly causing dislocations of masses of people (land grab) to give lands to foreign investors or their political supporters and ethnic political bases. This has also forced millions of people into poverty. Corruption, nepotism and bad politics have also adverse roles in facilitating inequalities.

Furthermore, the report claims that from 2005 to 2009, “Ethiopia recorded higher growth than China, and Uganda outperformed India.” Despite such growth, however, the report pointed out that labor markets remained informal. Because of that, only five percent of the people engaged in manufacturing activities and work in firms with 10 or more employees. This shows that the important question of job creation to generate incomes, according to the report, has not received sufficient attention.

While in the case of Ethiopia efforts were exerted to reduce poverty, a good record of combining robust economic growth and reduced inequality is witnessed mostly in Rwanda. In general, it is recognized that Africa’s record on fighting poverty has been “constrained by inequality.”

APR shows: The poorest 20 per cent in Sub-Saharan Africa typically receive 6 per cent or less of national income; and the poorest 40 per cent in most cases receive less than 15 per cent. In many countries, the pattern of economic growth is reinforcing these inequalities.

One recent poverty assessment for Lesotho, which has one of the world’s highest levels of income inequality, concluded: “The main reason for the high poverty rate is not slow economic growth but high inequality.” That verdict is as having far wider application in Africa.

Even before the structural and social causes of inequality are properly addressed to reduce poverty and alienation in Ethiopia, government policies involving dislocation and of late the ethnic discrimination and the consequent reported “deportation” of citizens within their country, has uprooted farmers from their lands. The idea is to give the lands to either foreign investors or regime supporters. Evidently, such policies have quietly given rise to deepening poverty and inequalities amongst communities of displaced peoples.

The APR sees ethnic politics as contributory to inequalities. It states in that regard:

    Regional aggregates mask underlying inequalities in access to education. Disparities linked to wealth, gender, ethnicity, the rural–urban divide and other markers for disadvantage create social fault-lines running through the region’s education systems. As countries have moved closer to universal access, the challenge of combating these disparities has been brought into sharper focus. Continued progress towards the goal of universal primary education by 2015 will require interventions that reach those who have been left behind.”

 

But what does inequality mean? What are its implications? What can be done about it?

Zanny Minton Beddoes

Zanny Minton Beddoes

They say a rising tide lifts all boats, but poverty and inequality are bad for economic growth.

In a special report in The Economist, economics editor Zanny Minton Beddoes* looked at wealth and poverty across the world.

‘For richer, for poorer’ is her special report on the challenges of global inequality. In this rado interview (courtesy of ABC, Australia, 27 January 2012), she asks how we can deliver fairness without sacrificing economic vitality and growth.

http://mpegmedia.abc.net.au/rn/podcast/2013/01/sra_20130127_0840.mp3

 
*Updated.

*Zanny Minton Beddoes is The Economist’s Economics Editor, based in Washington DC. She oversees the magazine’s global economics coverage, managing a team of writers around the world. Before moving to Washington in April 1996, Ms Minton Beddoes was The Economist’s emerging-markets correspondent based in London.

2 Responses to “A look into the politics of inequality – Listen to Zanny Minton Beddoes

  1. simeneh1 May 8, 2013 at 09:08 #

    I think Ethiopia will be one the countries in Africa with a low income inequality fot now, but in the future the income gap will widen

    Like

    • THE ETHIOPIA OBSERVATORY May 9, 2013 at 14:25 #

      The Editor responds:

      Thanks for your observation, Simeneh. However, I am one of those who would not like to wait until the wealth of those in the upper crest is counted. in Ethiopia, in the past two decades we have already shown how aggressively the ethnicization of power has gone and you know what it has been done, especially after the 2005 election.

      In nearly a decade now, we have been witnessing the configuration of the economic basis of that power. This is, aside EFFORT, the era of fruition of TPLF’s efforts to put an economic base to that power. For that, the TPLF has been using state enterprises, state policies and the national budget to fund EFFORT enterprises with lucrative contracts without any competition the Commercial Law of Ethiopia is saying a legal requirement.

      Consequently, we have entered the era of the state officially and openly passing wealth to TPLF companies. All these state capital expenditures, largely financed with loans from abroad and at home, aid and taxpayers contributions go to EFFORT companies and China.

      Other Ethiopian companies are being systematically kicked out of business or the competition. Therefore, they are progressively seen lacking the ability and the capacity to be active and compete and get share of their bites.

      To discourage them, the TPLF has been using the pretexts of taxes evasion and other crimes to hit non-ruling party owned businesses out of business, if you remember what happened to coffee exporters whose stores the TPLF burgled and blamed them and finally sent all the major exporters to prison.

      In this connection, recall that the TPLF member who was found of guilty by law and the court of years tax of evasion in Mega (TPLF’s), mostly overseen by the late prime minister’s widow, and was released within a week from his six-year prison term. Can you mention one name of a single businessman or official sent out free from such crimes, if and when he did not belong to the TPLF?

      Clearly, all sorts of inbuilt disadvantages exist for the incipient non-TPLF construction companies.

      Simenhe, you are right that the wealth disparity may not so huge in Ethiopia, speaking in relative terms and especially when compared with other countries.

      Nevertheless, as Zanny is saying in the clip, the dead powers of the constitution and the Commercial Laws of Ethiopia are brutally abused, because of which political and economic corruption within the ruling party has reigned supreme.

      This is the mother of real inequalities, already visible in the country, and the configuration of the disparities that exist in countries such as ours, whose inevitability you too admit. I see it now as real; you believe it is coming!

      it is a very healthy difference of perception!

      Cheers!

      Like

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