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EDITORIAL COMMENT : GDP growth requires investment in the poor

Zimbabwe’s development trajectory has been uneven, and if the Vision 2030 of a middle-income economy is to be meaningful, the new wealth being created over the next decade needs to be more evenly distributed.

The Government is already tunnelling into the economic data to see where inequalities are serious so that it can give priorities in development programmes to the areas that have been left behind.

That does not mean ignoring the better off areas, not cutting back in some areas, but what it does mean is that development must not only create new wealth, but also spread that extra wealth more evenly.

In the first survey, the critical measure of the wealth of each province is the gross domestic product per person. GDP totals for a province are less useful, since provincial populations vary quite dramatically.

But when you divide the provincial total by the provincial population you can start getting a very good idea of how wealth is distributed provincially.

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Some of the figures presented this week might startle some. Matabeleland North, for example, has a GDP per capita almost twice that of Manicaland and Matabeleland South is only just behind, in fifth place in the provincial figures.

But the two Matabeleland provinces are not almost pure farming provinces, which Manicaland minus Mutare definitely is. Strip out the Hwange coalfields, the Gwanda gold belt and the Victoria Falls area tourist industry and you will get a very different picture.

And generally this is the case across the country. Remove the towns and the big mines, and we find these are islands in a general sea of quite bad poverty.

Agricultural production does vary, with the figures suggesting farmers in Mashonaland East and West are on average more productive than most, perhaps because tobacco is a profitable crop, but even the best rural areas have per capita GDP well under half the metropolitan provinces of Harare and Bulawayo, which are quite close together in wealth once you factor in the populations.

So one major development thrust must be to start generating wealth on farms. The Second Republic has been doing this, to fill a variety of goals from national food security onwards.

But while a lot of stress is placed on slashing food imports, for the more than one million households under the Pfumvudza concept there are overriding priorities why they have gone through the training courses, signed contract deals and put in a lot of preparation work on their little farms to qualify for inputs.

These smallholder farmers basically have two goals: to ensure that the family can eat a lot better and to have some money in their wallets come harvest time.

And this is how the real success of the major efforts and investments made by Government will be measured, growing per capita wealth across the rural provinces as each family creates its share.

The other desirable goals of reduced imports, better national nutrition, and more raw materials for industry are automatically generated by better farmers, adequately supported and growing more to make more money for their families.

Starting the development curve rising by giving priority to investment in smallholder farming was required for all sorts of reasons. But one major result is not only an increase in national wealth, but a better distribution of that wealth.

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As rural per capita wealth and production rises a whole lot of other opportunities arise in the rural areas as when businesses and service industries designed to support the farmers can be viable, and when processing industries can be opened near the sources of their raw materials.

In a highly-developed farming area, such as we do find in middle income countries, only a quarter or a third of the working adults might be farmers, the majority actually in businesses that support the farmers and process the produce of those farmers.

And that sort of economic development is easily measured in GDP figures that tunnel down to each area.

Of course, those growing non-farming businesses, along with the farms themselves, need basic infrastructure services, such as roads, water supplies, health services, energy and schools.

And that is where the devolution programmes come in, where from block grants, plus local resources, communities can build up this backbone and ensure that both the primary producers and those who use their produce can grow viably.

Even in non-farming sectors we see pools of poverty. The provincial statistics show that gold panning and artisanal mining do not create vast per capita wealth. For that you need the big mines with the skilled engineers and the good jobs, again investment rather than just scratching a living.

Nor should we forget that the generally higher GDP per capita of urban areas is measuring an average, and an average in say Harare will find the mean between rich businesspeople in Borrowdale and poor people in Mbare hostels.

Development needs to move a lot of urban people as well up the rungs of the ladder if we are to achieve Vision 2030.

The farm investments now being made will help urban growth as well. Farmers with money will be buying more stuff, and the smarter industrialists will be figuring out those requirements and ensuring they can produce the quality at the right price that will expand their markets, and so allow them to open more factory space and hire more people.

Development priorities are not about winners and losers. They are about winners, period. Moving large groups of a population out of dire poverty creates markets and customers for many others, so you get a double boost to GDP, the new wealth created by those on the bottom rungs and the new wealth created when others make and process the things they need.

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And generally a Government will get more bang for its buck by concentrating on moving the poorest up the line, in a quite rational belief that the rich already have the resources to expand their wealth further as the economy grows so long as the Government makes it easy to expand a business.

This is why so much of the development strategies concentrate on infrastructure and investment into the poorest communities.

No one is trying to make the rich poorer, they need their money to grow more business, but good development must mean making the poor richer by opening opportunities for them to transform hard work into real productive gains.

And a middle income economy should mean that all in that economy are at least middle income, with a growing percentage doing better.

After all, once you are middle income you do not want to stop. New targets then arise.

HERALD