Africa’s income inequalities: The reality of ‘a few big men’

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ECONOMIC inequality has dominated international economic debate recently, and with good reason. Developmental charity organisation Oxfam International made headlines not too long ago with its report which noted that the 85 richest people in the world own the wealth of half of the world’s population.

By Perry Munzwembiri
OWN CORRESPONDENT

The report further suggests that this is no accident either, as more often than not; these wealthy elites “co-opt the political process to rig the rules of the economic system in their favour”.

In America, the top 1% of the population earns 95% of the total income. Yet even in the world’s largest economy, this is a very topical issue, and could yet be the flashpoint of the next Presidential election amongst the America’s electorate. Sub-Saharan Africa sees nearly 50% of its population live on less than $1 a day, the world’s highest rate of extreme poverty according to the African Development Bank.

What truly drives economic growth is a thriving middle class that spends on goods and services, which in turn stimulates businesses. This ultimately leads to a robust economy, with solid growth prospects going forward.

Be that as it may, here in Africa, increasingly we are seeing the emergence of an elite obscenely rich section of society; “A few big men” with virtually all control of the economic factors of production. Perhaps unlike in the developed lands of Europe or America, in Africa, usually these wealthy elites have risen to prominence not because of the noble virtues of hard work and innovation.

Of course to be fair, this is a broad generalisation which may not hold true for all the continent’s rich. However, evidence would seem to suggest that they have leveraged off their political connections to climb up the economic ladder. Nowhere else is this fact clearer than in South Africa which undisputedly, is economically to Africa what America is to the world.

Tokyo Sexwale, Cyril Ramaphosa, Mathews Phosa among a host of other ANC “cadres” have emerged to be leaders of the pack; enjoying a greater piece of the economic pie.

Deng Xiaoping, leader of People’s Republic of China after Chairman Mao’s death is still famous among other things for preaching the gospel of, “Let some people get rich first.” Ironically more than three decades later, China still has to contend with the burden of massive income disparities among its population.

For the first time in some 12 years, the Chinese government released its Gini coefficient (a measure of income inequality with 0 being perfect equality and 1 being perfect inequality) which stood at 0,474 in 2012. This underscoring the great schism between China’s haves and have nots, more so after following a model that pushes one particular class to get rich at the expense of another.

What is fundamentally wrong with an approach that allows a select few individuals to get rich first and get ahead of the curve as it were, is that it breeds a sense of entitlement among the wealthy elites which can be particularly hard to get rid of in the long run.

The big don’t drive the economy

Inevitably, the incidences of corruption tend to become commonplace as the politically connected wealthy elite seek to consolidate their hold on the economy. Wealth will therefore never be equitably distributed in the economy. Equitable growth, which sees a thriving middle class also enjoying a larger cut of the pie, would be most desirable. After all, it is this class that creates sustained demand for goods and services produced in an economy.

Their financial well-being or lack thereof has a direct bearing on any economy as it is the middle class in essence, which creates a ready market. However, evidence on the ground would seem to suggest that this elementary tenet of political economy is increasingly being overlooked today.

In Zimbabwe for instance, there has been scandalous revelations of CEOs of quasi-government organisations like ZBC (the country’s sole broadcaster), PSMAS (a medical insurance society to which most civil servants are signed up to) awarding themselves hefty salaries when workers of the same organisations have gone for months on end without pay, or as in the case of PSMAS, members being denied medical service as the society fails to settle claims. As a result, economic activity at the lower base of the pyramid, which by the way accommodates a significant portion of the population, is stifled, as with no money, there is no spending power.

This invariably fans a self-perpetuating economic system dominated by a few wealthy elites at the expense of the greater masses. Growth therefore will never be sustainable as it is not at all inclusive.

These “few big men” can never drive real economic growth and whatever growth that may be seen in the short term is only, but a mirage as not every member of society is catered for. Africa grew at a faster rate in the last decade than most other regions, but the impact on poverty is much less than we would’ve liked. Africa’s growth has not been as powerful in reducing poverty as it could have been because of the high levels of inequality,” said Francisco Ferreira, acting chief economist, World Bank Africa Region in Africa’s Pulse, a bi-annual analysis of the continent`s economic prospects.

A shift in the mind-set of policymakers and responsible authorities is thus critical, to effect economic structural reforms that would ensure inclusive growth with less income inequalities, if economies, particularly those in Sub-Saharan Africa, where statistics show most of the world’s poor will live in by 2030, according to the World bank, are to develop.

The current model of a few wealthy elites enriching themselves while the masses suffer under the vagaries of poverty will curtail growth in the long run.

Renowned political commentator Moeletsi Mbeki makes this point in his book Architects of Poverty, “If the African sub-continent is to develop, it needs a new type of democracy that will empower not only the political elites, but also the region’s private sector producers, most of whom are peasants.

“The new democracy should be able to restore the growth of an independent and productive middle class too.” Hence the reality facing Africa of the elite nouveau riche has to be transformed to that of a growing and empowered middle class.

10 COMMENTS

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    • Like what someone has said, “we need not weaken the poor in order to strengthen the weak”. a balance must be struck however between encouraging enterprise which enriches people and ensuring as well that our poor are well taken care of.

      the basics of the state creating a conducive environment for businesses to succeed must be respected, and when those businesses do make it, it is only fair that the state enjoys a portion of those fruits which it will then equitably redistribute among the population.

      This benefits of such a system accrues first to the businesses, as more people have money to spend, and businesses prosper, and the government benefits from a wider tax base as more people are economically active.

  1. Very well said. The main point I liked is this one: “Perhaps unlike in the developed lands of Europe or America, in Africa, usually these wealthy elites have risen to prominence not because of the noble virtues of hard work and innovation.”

    I was going to say we need not weaken the strong to strengthen the weak. Let man of hard work and innovation thrive and inspire the poor. We hate it when a few connected men thrive out of nothing that benefits the next man.

  2. In the 1960s we were told by our nationalists they were fighting for an egalitarian society. If you look around the wealthy are those politically well-connected who can loot at will. We no longer hear about an egalitarian society but preferential treatment for those WE VOTED into power. They have taken all he farms and shared them among themselves. The country’s diamonds are their own.
    Five major reasons why it will be very difficult to eradicate corruption in Zimbabwe. We are all coming from very poor backgrounds and given any position of authority some will steal so as to keep up with the Joneses. Our tradition of the extended family is fertile ground for corruption – we have to look after our own relatives in the extended family, including in-laws – which means employing relatives in positions in government not suited to them. Some who fight for government positions are not politically mature to hold high office notwithstanding their high level of education. The most corrupt in our society have barricaded themselves in a ring of steel called “liberation war”, are above the law and intend to rule whether people like it or not. And the docile press has been complicit in corruption by perpetuating the 33 year old lie that those now clinging to power mercilessly, “freed us from oppression” when we were a billion times better off under white rule, and when it was our votes which got them into power in the first place in 1980. I defy anyone to tell me otherwise.

    • Mungatedzere zve mbavha dze Zanu-pf. Africa is full of greedy dictators – ours is among the worst. The AU is like the Mafioso. meetings every now and then to discuss how to retain power and beg from the West.

  3. Well said @Musona very insightful comment when will this york of dictatorship be broken we suffered enough and some1 can say close your mouth utter nomore on corruption and is a candidate 4 president it is very scary.

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