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Thursday, 20 December 2007

Educated but poor....

A majority of youth in Africa today have completed more years of schooling than their parents did but have limited opportunities in employment and remain poor, according to the The World Youth Report 2007.

It is estimated, for example, that over 90 per cent of the young people in Nigeria and Zambia live on less than US$ 2 per day, and the same is true for almost 40 million youth in Ethiopia and Nigeria. These high levels of poverty persist despite poverty reduction strategies and some improvement in economic growth in the region. This suggests that recent policies adopted to revitalize the economy in Africa are not having much of an impact on youth poverty.

13 comments:

  1. This suggests that recent policies adopted to revitalize the economy in Africa are not having much of an impact on youth poverty.

    Unless they involve the massive redistribution of wealth, why should they?

    Unless

    - the mines/oil wells are used for the benefit of the economy and the people and

    - land is redistributed to create hundreds of thousands of medium sized farms

    why would any 'policy' have 'an impact' on anything?

    It is all about how wealth is distributed across society. Give people a means to make a middle class income, and poverty is eliminated.

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  2. Mrk,

    What is your ideal "youth policy", aside from the broader issue. What do you think government can do specifically for the "youth"?

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  3. Cho,

    I'm sorry if I sound a bit repetitive, but it is so obvious that when the big issues are taken care of, a lot of minor issues will fall in place.

    What specifically the government could do for youth is educate them. Mandatory education.

    For school leavers, there should be jobs available they can fill.

    But then you get back to - where is the money for mandatory education going to come from? And where are the businesses that are usually around the world provide those jobs going to come from.

    And then I have to return to my original answer.

    Most people in developed economies are employed in SMEs, not the well known corporations. Most farms in northern Europe are 90 hectares in size.

    That seems the obvious step to aim for, until someone presents me with a better model.

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  4. What do you think government can do specifically for the "youth"?

    Cho,
    How about funding entrepreneurship nurturing schemes in colleges and universities, which take creative students and expand on their ideas?

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  5. "I'm sorry if I sound a bit repetitive, but it is so obvious that when the big issues are taken care of, a lot of minor issues will fall in place." - MrK

    Trickle down economics...thats what the IMF/World Bank believe in :)

    I think we need to go beyond the "big issues"....for example of all blind people, only 1% are employed....now I don't think any of the big issues would help narrow the gap for them....

    So in short, I think there should be specific policies targeting some of these difficult areas....yes trickle down economics may work..but the PACE at which it may get there is also important...

    "How about funding entrepreneurship nurturing schemes in colleges and universities, which take creative students and expand on their ideas?" - Zedian

    Good idea! Reading the report, it seems that the problem is the wrong kind of education that the youths have...we need education that allows the youths to be self dependent...not to look for jobs elsewhere...

    That takes the debate to the class room... its there where the debate needs to start...

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  6. Trickle down economics...thats what the IMF/World Bank believe in :)

    And the neoliberals.

    But 'trickle down' is the exact opposite of what I'm arguing. What I am suggesting is prioritizing small business, not the very wealthy - which is what the phrase 'trickle down economics' implies.

    What I am saying is that unless the issue of 70% of people living below the poverty line is not dealt with first, marginal issues (like employment for the blind) are not going to have any impact.

    Basics first. Employment. Distribution of the means of production. Land reform and land rights. Developing agriculure, mining, infrastructure.

    And they cannot be avoided because they are tough, or upset the status quo, or are uncomfortable for the political class.

    It took a lot of pain for Zimbabwe to get serious about agricultural reform - not only land redistribution, but tractorisation/mechanisation, services.

    I hope someone in Zambia finds the courage to do everything that has to be done to create an economy that is inclusive to everyone.


    Zedian,

    How about funding entrepreneurship nurturing schemes in colleges and universities, which take creative students and expand on their ideas?

    That would be a great initiative. But the government should go further, and look at what are the major constraints on startups, which would be the very type of company students would set up. The government could exempt startups from taxation, or exempt their employees from income tax.

    There are a lot of things that the government can do, if the political class gets behind it. They haven't done so, and I wonder why? To please the IMF? Right now, their policies to indigenous SMEs are pretty hostile.

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  7. what zambia needs is entrepreneurs who can build a middle class themselves. Also culture causes an issue here as many only want to be 'big' men and see no reason to work hard to get there. many look at successful people and are too busy condeming them to think about what they could do to emulate them. And then there is the lack of medium term or long term views - many people i know only thing of today with no care about tommorow.
    While i agree that any government is responsible for creating the right environment for this kind of thing, people have to do things for themselves and not expect the government to do it all the time. how come foreigners manage to come here and be successful??

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  8. "But 'trickle down' is the exact opposite of what I'm arguing. What I am suggesting is prioritizing small business, not the very wealthy - which is what the phrase 'trickle down economics' implies." - MrK

    Different brands of 'trickle down' economics emphasises different things. They all have one thing in common - the belief that bigger reforms are superior to small and more focused ones.

    "Basics first. Employment. Distribution of the means of production. Land reform and land rights. Developing agriculure, mining, infrastructure… And they cannot be avoided because they are tough, or upset the status quo, or are uncomfortable for the political class."

    I agree that there's need for prioritisation - or rather there's need for agreeing what the "basics" or the "foundation" should be. My point is that for certain issues e.g. youth or disabled unemployment we need swift additional measures.

    "Also culture causes an issue here as many only want to be 'big' men and see no reason to work hard to get there……While i agree that any government is responsible for creating the right environment for this kind of thing, people have to do things for themselves and not expect the government to do it all the time. how come foreigners manage to come here and be successful??" - Mpande

    Interesting view….culture as a reason for our underdevelopment.
    If culture is the reason we are not doing so well, perhaps it could also provide the mechanism for improving…..is the problem therefore that the government is trying to create a "right environment" instead of working within an existing one"? Its my view that there's much within our culture and traditions that would provide the answers to get us out the hole we find ourselves in. The very things about our culture that keeps us underdeveloped may be it is there that we should look for shaping our institutions and approach to growth….

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  9. Mpande,

    what zambia needs is entrepreneurs who can build a middle class themselves. Also culture causes an issue here as many only want to be 'big' men and see no reason to work hard to get there. many look at successful people and are too busy condeming them to think about what they could do to emulate them.

    Business environment is everything though. The few tough and brilliant entrepreneurs can succeed under extremely tough circumstances. However, the average entrepreneur needs a good environment, an educated workforce, legal protection and easy access to legal recourse, easy access to capital, existing infastructure to move supplies and finished products.

    For an individual who was an extremely gifted entrepreneur, and to get an impression of the monumental obstacles he had to face, see the biography of Arthur J. Gaston, written by his nieces,

    Black Titan: A.G. Gaston and the Making of a Black American Millionaire by Carol Jenkins and Elizabeth Gardner Hines

    Here is a guy who worked himself up from serving in WWI, became a coal miner in deeply racist and segregated Alabama, and started out by selling his wife's packed lunches to his fellow miners. From there he moved up to organising funerals and selling life insurance.

    But his story is few and far between, because the massive obstacles he had to face.

    We cannot get away from the fact that the first order is to create a genuinely nurishing and supportive business environment for local businesses.

    While i agree that any government is responsible for creating the right environment for this kind of thing, people have to do things for themselves and not expect the government to do it all the time.

    Context is everything. If the government had created strong infrastructure, a business environment that nurtured Zambian companies instead of foreign business, if their aim was universal education and healthcare, I would agree.

    Until then, it is clear what has to happen (see the above).

    how come foreigners manage to come here and be successful??

    Well that is the same thing all over the world. Selfselection is one factor, preferential treatment by the government is another.

    How come African immigrants in the USA do better than the average American? Selfselection. The people with the most 'get up and go', as well as education and money emigrate and are completely dedicated to make a new life for themselves. As immigrants, they have no relatives and few friends, so they dedicate most time to work.

    At the same time, not paying taxes as a 'foreign direct investor' is a huge advantage over indigenous business.

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  10. Cho,

    On the definition of Trickle Down (supply side) Economics From Wikipedia:

    These proponents argue that economic growth flows down from the top to the bottom, benefiting even those who do not directly benefit from the tax cuts. Opponents argue that economic growth from such tax cuts does not necessarily flow down, but may only "trickle down" if even that.[1] Proponents of the policies generally do not use the terms "trickle-down economics" themselves.[citation needed]

    Today "trickle-down economics" is most closely identified with the economic policies of the Ronald Reagan administration, known as Reaganomics or supply-side economics. Originally, there was a great deal of support for tax reform; there was a dual problem that loopholes and tax shelters create a bureaucracy (private sector and public sector) and that relevant taxes are thus evaded. To this day, economists generally favor simplifications and generally reform in the tax code[citation needed]. A major feature of these policies was the reduction of tax rates on capital gains, corporate income, and higher individual incomes, along with the reduction or elimination of various excise taxes.


    Obviously my beliefs on economics have nothing to do with tax cuts for the rich, or the belief that if you give free reign to the corporations that eventually their money will find it's way to the poor, or even small business. I have been arguing all along for an INCREASE in corporate taxes (specifically the mines), increasing import tariffs if they protect Zambian businesses. The only thing I can find in here is an agreement in reduction of income tax, specifically PAYE.

    I have made a clear distinction between small and big business. As I have always put an emphasis on creating hundreds of thousands of small businesses, there is nothing 'trickle down' about it.

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  11. MrK is correct in this.

    The government needs to help small farms and small businesses.

    For example, the Zambian textile industry is suffering because they have to compete against salaula. Cotton is an important crop and when the textile industry hurts farmers hurt. There should be an enormous tax on clothing coming into the country.

    But especially farmers need to be helped. They need loans to buy seeds. They need roads to transport the food to the market. The most important industry for the most Zambians is farming.

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  12. Error27,

    But especially farmers need to be helped. They need loans to buy seeds. They need roads to transport the food to the market. The most important industry for the most Zambians is farming.

    Right, and in and of itself (not even taking into account the impact of increased farm productivity and increased income that would mean for farmers, and lower food prices for consumers) would stimulate the economy.

    The government could use the National Service and it's money to create FDR style infrastructure projects, or just build local infrastructure, on the direction of local people.

    That alone could create thousands of jobs, as well as create future jobs by stimulating commerce.

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  13. South Africa struggles to fix dysfunctional schools:

    http://www.businessweek.com/news/2010-01-04/south-africa-struggles-to-fix-dysfunctional-schools-update1-.html

    ReplyDelete

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