Showing posts from September, 2020

Public health: How politicians always get it wrong!

 The COVID-19 Virus Thanks to COVID-19, public health has emerged as the top national security risk everywhere.  And it has triggered off a string of socioeconomic pandemics that no other shock before triggered:  There is rising; national debt; the collapse of economic activity; unemployment and surging incidence of poverty. The demand for governments to spend more to support the economy has never been so high!   In the past politicians and technocrats have treated Public health as a low priority risk. Ranking low after defense and public service salaries in budgetary allocations. They were always wrong! Even when the pandemic came calling, the response was lethargic at first. Torn between averting an economic and a public health disaster, they stuttered. They were unprepared for a sudden shock and bungled the COVID-19 pandemic as they did a hundred years earlier during the Spanish Flu pandemic of 1918-19. The scourge was sudden, extreme, and swift and there was no known cure. Epid

How Zombie Ideas create fragile economies

Zombie ideas are as destructive as terrorists  I have always found some economic hypotheses a paradox. They appear to belie the conclusions of the economic theories and their benefits, if any, appear transitory. Among the hypotheses are; higher minimum wages are a sure killer of jobs; tax cuts for the rich pay for themselves;  the private sector is more efficient than the public sector; market efficiency is the best  determinant of the true value of a factor of production.   There is no scientific evidence to back these beautiful sounding hypotheses. For instance, the hypothesis that higher minimum wages are a sure job killer is not persuasive when juxtaposed with factors that drive economic growth. Wealth creation is a function of demand: The higher the demand, the higher the production of goods and services, the higher profits and therefore, wealth.   The theory of demand teaches us that demand is effective when backed by money to buy the goods or services. So demand, call it c

AfCFTA: The Post Covid-19 stimulus in Africa

Kenya Airways: Retooling Africa must fast track execution of the World’s largest free trade area agre ement,  AfCTA , experts say. AfCTA, which is expected to come into force in January  2021, is according to the Brookings Institution,  the stimulus needed to jump-start post- COV ID-19 economic recovery in the continent,   given its fiscal constraints. Among the areas that need urgent attention is, pharmaceutical production, where Africa is especially vulnerable, adds the Africa Trade Policy Centre . It should also prioritize intra-Africa trade . The pandemic shocked the entire world because it was “sudden, extreme, and spread rapidly,” says    Daniel Susskind of Oxford University.   Policy measures to contain it disrupt ed the entire economic spectrum of production, supply and demand resulting in the “self-inflicted economic devastation.”  Such devastation also taught some critical lessons and exposed glaring risks . Among these are the vulnerabilities in the current world econom

Did Tanzania enter Middle-income level ahead of schedule?

 On July 1 st , The World Bank announced that Tanzania become a lower-middle-income economy from the least developed country Level. Her GDP per capita, announced the Bank, has hit the $1080 threshold.   There was a lot of fanfare about this achievement in Tanzania with analysts explaining what the implications of this development are. The government gloated that it had hit that level of development “five years ahead of schedule.” That left Tanzania watchers, I included, wondering how given the country’s shaky investment environment in the last five years.   Then a recent article in Forbes Africa Magazine hit the street. That development was achieved in five years of reformist President John Pombe Magufuli. I sat up. Time to fact check this story! That Tanzania is a lower middle- income economy is a fact. However, that it was achieved five years ahead of schedule is untrue. Tanzania rebased its economic accounting to 2007 in 2013. This lifted the GDP 28 percent over previous estim