Poverty Alleviation: What Africa can Learn from China
|A press meeting between NGOs in Africa and China|
In the recent past, there has been a new wave of technology transfer by Chinese companies to key frontier economies. This transfer has been mainly funded by the highly liquid Chinese Central Bank and other development institutions like the China Africa Development Fund (CADFUND). Notably, China became the only developing Nation in the world to have achieved the Millennium Development Goals (MDGs) before the much awaited 2015 deadline. This was not done overnight. From a very general perspective, it has been an effort driven by a government that is not the most democratic in the world - but one that has demonstrated goodwill and commitment to work towards better living standards and food security for its citizens. One would ask; why food? But the record is quite clear- by achieving food security, everything else certainly falls into place.
In the past couple of days, I have had the opportunity to tour several provinces in China; from the very food basket of China- Henan to its political and cultural capital Beijing to the commercial center in Shanghai. In these tours, I have had a chance to meet Chinese in both extremes of life - the very rich in Beijing to the bed ridden in Henan’s care centers; from the thousands of tourists visiting the Forbidden City to the loyalists of the Shaolin Temple and hundreds of thousands who visit the Yuntai Mountain every weekend. From all these people, the story is quite telling: China is not the same as it was two decades ago.
Interestingly for the poor though, the poverty line is just a thing of the past - thanks to a pro-active government intervention program and sustainable poverty alleviation. That is as we see it though. A professor in Research Methods currently based in Beijing claims that not all that visitors see is to be taken at face value. In a flight from Beijing to Henan, I asked John if the GDP growth rate was anything to go by. According to him, the villages we all get to see are an absolute contrast from the reality on the ground. According to him, the ordinary Chinese still languishes in poverty, surviving on less than a dollar a day. Unfortunately, you cannot assess the reality on the ground because the law does not allow foreigners to visit rural areas. So, information can only be confined to the model care centers, model hospitals and government supported schools.
The records however still present an ideal case that would drive most East African economies to a great level. A case in point is Henan, with a population of over 100million people; it is one of the top five richest provinces in China. They host huge tracts of land that are leased out to farmers who grow wheat and rice mainly along the Yellow river, one of the most popular tourist attraction site in the outskirts and various industries and car assembly points.
Many would ask: what has made poverty alleviation possible in China? How did the Chinese government achieve this in a short time? Why is China the fastest growing economy in the world surpassing the all time giants - USA and Japan? It all starts from one basic fact- growing a nation is not rocket science. A people fed are a people empowered. The Chinese seem to know this too well.
In the 1980s and 90s, the Chinese came up with a master plan to address poverty. It all started with a plan to secure the right to food, clothing and basic education. As has been the norm with China to outwit the world in its expectations, the plan was not to compete with the MDGs but rather to address the reality on the ground. The Government, as a key stakeholder came up with the Dibao System- which is the minimum living allowance. The system sought to incentivize priority products and services for a freer society. This helped put everyone at more than a dollar a day. This is not to say that social protection was a substitute to labor. The government still ensured that the Chinese people in the rural areas remained active in national development, achieved through the creation of jobs and supportive agricultural practices. Companies got tax exemptions for setting up factories in highly populated rural areas especially in the South-Western Chinese region that accounts for over 30 percent of the poor population of China (300mn people). Notably, the southern areas are very rocky therefore not very populated.
All this sounds like a very complex matrix. It perhaps could be, and goes to explain why it has had a few failed starts. Each failure was however welcomed by some new energy to keep the economy growth in focus. The Government introduced a poverty alleviation organ which is financed and regulated by the Ministry of Finance. The Leading Group Office of Poverty Alleviation and Development (LGOP) works together with The State Council towards achieving this process. Under LGOP, there are 13 different supporting ministries. These ministries meet once in a year chaired by the mayor and deliberate on budgetary allocation and approvals. Under LGOP and the State Council, there are autonomous bodies within the Provinces, the Prefecture, the County level and the townships. These bodies work hand in hand with the government on addressing the poverty situation and reporting appropriately. To avoid misuse, the Ministry of Finance has a special account. Through this account, integrity and accountability has been effectively addressed.
But how do the Chinese address the deserving people in the society with such a huge population? Huang Chengwei, Deputy Director of International Poverty Reduction Center in China (IPRCC) addressing us in Beijing reiterated that it has not always been easy. “In the 1980s and early 90s, it was very difficult.” In the mid 90s however, the government selected poor households and in areas with the highest concentration, set up industries. In total, 150 villages out of 750 villages benefited.
It sounds more like building a case study out of a real grassroots situation. The government went ahead and built infrastructure at the turn of the 21st Century. At the time, basic needs were not a main concern since they had already been addressed in the first phase.
But an economist would disagree on the effectiveness of such a model owing to the challenge of land availability among the rural poor. Those who subscribe to the Hernando de Soto’s model on land title/ownership rights will stress on the ineffectiveness of this. The Chinese government however signed 30 year contracts with farmers. Through this, they could farm. But note that with time, the urbanization would still catch up with the rural agricultural population. That was already thought out. Farmers who after the 30 year term opted to join the urban employment bandwagon had a policy protecting them through employment creation. This created a guaranteed income. Public institutions would eventually merge city development with rural growth; that way balancing rural and urban development.
But in all this, what is the private sector’s role? Policies were very favorable. Note however that even without the private sector, the model would still have survived in lifting the poor out of poverty - but without addressing the progressive nature of their economy. Through its private sector development policies, 200million jobs have been created since the nineties. Eastern China has the private sector support more prevalent- perhaps explaining why it has a lesser population of rural poor.
Interestingly, initiatives like the Rain-Dew project cannot be ignored. This is one of the many sub- projects under the IPRCC and the government. The Rain-Dew Project advocates for the principle that all should be in the mainstream economy – helping the rural unskilled labor to secure jobs just like the urban folk. It does not all end there. Competition for resources in Western China regions has called for the need to invest in education by deploying more teachers from East as well as new recruits. This has helped address the need for sustainability and skill set.
Sampling all this, one would say that perhaps the bottom line in addressing poverty lies in addressing agriculture key to it being subsidies to farmers. Does that therefore mean that Agriculture can lift Africa out of poverty? At policy levels, the answer is no. But from a development perspective, it should be the second step after addressing the three basic needs. It is possible to fight poverty through agriculture, at least for majority of Sub-Saharan African countries. This is because the ‘West’ has practiced extortionist policies in the so called international markets. A Chinese would probably ask, “Who cares about the export market anyway?” This is because their major market is domestic.
Agriculture can lift Africa out of poverty. Agriculture has to be approached with a business mindset. Every business has an exit strategy/plan. If East African Economies could open up their markets from within its borders and maintain a protectionist approach externally, businesses would get a new lease to thrive domestically.
And for the rural folk here, 30 years of land lease can easily be defined as the time at which a farmer would graduate from agriculture to lesser engaging tasks out of the farm. This is because after leasing land from the government to farm for the 30 years, most of them prefer to not to renew the lease having projected to graduate to a better life after the period.
One challenge still lies ahead though and explains why the poverty gap may take a very long time to deal with. The Hukou system which limits rural folk from working in the city has contributed to the creation of a class system. It feels more like saying, “the son of a beggar always a beggar.” This perhaps explains why china still wants to remain a developing country. The fact that an upgrade of status could expose the internal limitations in the fight against poverty thus undermining efforts to combat it. Census results due by the end of May could expose some interesting statistics and perhaps push for a policy review to help fast track the growth in the fastest growing economy in the globe.
To sum it up, African states should embrace creation of subsidized loans to the poor, food for work, agricultural tax reforms and subsidies, grain for green program and expansion of transport infrastructure. That way, poverty issues would be addressed and wiped out over a set period of time.
By Michael Musau.
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