Vision 2030: Wealth creation through decentralisation

Dr Tinashe Eric Muzamhindo

Developing countries often exhibit widening discrepancies between developed and undeveloped regions.

This is principally because mechanisms that work in industrialised countries are being cloned, without considering local conditions and resources of recipient nations.

Transnational conglomerates and large monopolies have an unfair advantage in these nations, because the rules of competition are based on ancient practices and business models that are out of sync with public industrial policies, the economic driving units and the social benefits to the communities.

There is need for a mechanism that makes markets, technological processes and public policies converge effectively, even under these hostile conditions.

It seems that the worst problem of developing countries is that they are immersed in historical paradigms like:

•      Natural resource (physical, knowledge, relational) extraction and exploitation with minimum value added

•      Adopting, almost by decree, the practices, technologies, economic models, or political models of other countries, with a cloning mentality devoid of context

•      Inability to associate themselves with networks of economic value and social interest

•      Distrust, which prevents them from forming systems of human, economic, social, public and environmental capitals in a joint, win-win performance for everyone.

•      Inability to practice an unbiased and transparent state of law for the protection of property (physical and intellectual)

•      Constrained enforcement of contracts and alignment of industrial policies with the well-being of the community

•      Lack of collective future-oriented consciousness. The businessman, the enterprise and the public institution tend to operate in an individual manner, isolated from the rest, when no sense of collective consciousness is fostered outside of the initial liberation ideology.

Value needs to be produced, either through leveraging natural resources that can be currently found in regions that are economically less fortunate and giving them an accelerated relocation to greater value or by transferring the value to homogenise development.

This also includes bringing world-class products and processes into regions with limited regional conditions, and at local prices to expand local markets.

Pillars of development

It is important to introduce a policy of decentralisation or devolution. Wealth must spread throughout a country, and this can be achieved in part through:

•      Representative awarding of contracts and roles

•      Devolution of administration of funds from the national revenues

•      Inter-region trading and promotion of special economic zones that promote specialisation through economies of scale.

Industry, which becomes more competitive and acquires global standards, is capable of transforming scarce local resources into high-value products that are comparable with products of successful countries.

Creating an enabling environment for wealth creation

Wealth creation is an intergenerational process that requires an environment that not only enables wealth creation but sustains it.

While each nation determines its own form of government and governance, there are some universal attributes that invariably foster wealth creation, namely:

•      Limitation of political opportunism of the state and civil servants at constitutional level. This must in turn be enforced diligently at all levels. Proper constitutional constraints will make certain that lawmakers, for example, do not enact fiscally discriminatory legislation. State’s structures will also be protected from abuse by interest groups to plunder the economy for their own benefit. Such limitations should minimise rent-seeking and other forms of opportunism, while at the same time advancing entrepreneurship and healthy macroeconomic performance

•      Individual liberty must not be sacrificed for unlimited majoritarian rule. Constitutional frameworks should ensure that while the will of the majority is adequately represented in the nation’s vision and policies, the majority must not totally oppress and marginalise the minority, particularly if their views do not destroy a nation’s norms and values

•      An effective governance system is one that is consensual, secured primarily by voluntary agreement between stakeholders and are designed to enhance their well-being. Citizens of a nation must see the state as a social arrangement put together by them to protect their “person” and their “property”, as defined and elaborated in the Constitution.

In addition to the core attributes stated above, a state that fosters an environment of wealth creation also ensures that some of the following minimum conditions are upheld:

•      Upholds the Constitution and maintains law and order

•      Protects and enforces property rights, including the protection of the individual from domestic and foreign aggression

•      Promotes both entrepreneurial activities and the creation of wealth

•      Enforces freely negotiated contracts but does not engage in activities that impede trade or free exchange

•      An ideal model of government has two main functions which are protective and productive: The first is to maintain law and order and the second is to provide public goods. A protective state engages in activities that enhance entrepreneurial activities and the creation of the wealth that can be used to confront poverty, deprivation, and advance national welfare. This implies the effective enforcement of laws against illegal activities, including the protection of property rights

•      Members of society may grant the state the power to monopolise the use of legitimate coercion which it uses to protect citizens from internal and external aggression.

•      In other words, the protective state shields its citizens from harm and provides them with a framework of laws within which they can freely engage in trade with each other. In addition to enforcing contracts, the state also enhances free exchange through its activities, implying that the state cannot pass or enact laws that restrain the individual’s ability to trade arbitrarily.

•      In order to reach a synergy among a nation’s stakeholders, planning, collaboration, synchronisation and coordination of different socio-economic players and their relationships in a common goal of creation of wealth and its equitable sharing in a sustainable manner become a key function of the state.

•      This alignment is achieved in two levels. The first level is the transformation of technological and scientific, knowledge or natural resources into great-value marketable products and services. A second level of interaction is that of the industrial thrust drivers, capable of transforming these products into a system of capital that have greater impact and sustainability. The network that is formed this way can grow, lower its barriers so that more stakeholders would enter and strengthen the network. The network would thus acquire increasing social and public economic value.

Challenges in fostering a wealth creation environment

During the last four decades, some governments in Africa have either been unwilling or unable to provide public goods and maintaining a framework of security.

In fact, in some regions of the continent, owing to corruption and poor governance, governments have become irrelevant to the lives of the people by merely pursuing and advancing the interests and objectives of the ruling elites and their supporters.

These structures were not designed to enhance the ability of Africans to govern themselves and generate the wealth to meet their needs, nor were they expected to advance peaceful co-existence of groups.

In fact, during colonialism, peaceful coexistence was not achieved through cooperative agreements but by force, deceit and co-optation of traditional rulers, bribery and other forms of coercion.

Instead, the colonial institutional arrangements were specifically developed to help the Europeans exploit the Africans and their resources for the benefit of their metropolitan economies. A gap of service provision develops.

This has created a space for the proliferation of non-governmental organisations (NGOs), many of which have usurped the state in the provision of services such as healthcare, education and water.

After independence, the new African leaders were expected by the African peoples, especially those who had been marginalised by colonialism, to engage all.

 

*Dr Tinashe Eric Muzamhindo is head of the Zimbabwe Institute of Strategic Thinking (ZIST). He can be contacted at [email protected]